OVA-OGC: What’s Wrong With The Process & How To Make It Right — Part 2 What’s wrong with the OVA Board’s response to the OGC appeal?

This is the second in my 3-part editorial series addressing issues with the current process being used to decide on whether and how OVA should provide financial support to OGC. The other parts are:

Part 1 What’s wrong with OGC’s campaign for OVA funding?
plus introduction to the series and some background facts
Part 3 What’s wrong with Oakmont News coverage of the OGC question?
plus some concluding remarks

What’s wrong with the OVA Board’s response to the OGC appeal?

The OVA Board has been lobbied by OGC since before the election, and it is understandable that they might accept the common sense premise that the golf courses are a critical part of the Oakmont environment and so must be saved. But if they follow that premise blindly, without thoroughly investigating alternatives and long-term consequences, then they are not fulfilling their fiduciary duties as board members.

OGC has been welcomed with open arms, ignoring the issues addressed in Part 1: OGC’s request has been treated by the OVA Board as though it was completely reasonable. The OVA Board members and candidates, even before the OVA election, met with OGC Board members. While we can’t know exactly what went on at such closed-door meetings, everything we have seen indicates that all agreed from the start that OGC must be saved, that it would be an Oakmont disaster if the golf courses were to fail.

The OVA Board had prioritized OGC’s needs over our own: The current OVA Board has spent a lot of time on the OGC issue, delaying essential work on legitimate OVA priorities. As Steve said in response to an Open Forum question about progress on reviewing reserves, and I am only paraphrasing, “the Board has only so much time and we haven’t gotten to it yet”.

The OVA Board seems to be considering 2019 funding for OGC, without investigating and understanding future spending requirements for Berger remodel/refurbishment and Central Activity Center (CAC) expansion: We know that OVA facilities suffer from lack of adequate maintenance over many years, and several major spending projects need to happen over the next 3 or 4 years, including work on the East Rec, Berger and the CAC. Compounding these needs is the fact that our reserves are now funded at less than 20%, the lowest level in many years. It is a virtual certainty that OVA will have to borrow money for some of these major projects, with a special assessment added to our dues in order to make the payments on such loans. The impact on our dues is highly uncertain, but I made an estimate back in March that the dues impact for Berger alone would be from $5 to $15/month/member, depending on which of the options presented in February was chosen [1] (I make no claim for accuracy, but it gives a ballpark of what we might expect). It seems to me to be quite irresponsible to consider any major funding of OGC when (1) the OVA Board doesn’t yet have any reasonable profile of spending and dues impacts for the larger picture of all OVA projects over the next few years, and (2) considering that we will be borrowing for other projects, then the effect of funding OGC will be that we will be borrowing money, to be paid back by Oakmont residents, for the purpose of giving it to OGC to spend as they like.

Several OVA Board members appear to have conflict of interest issues relative to the OGC question: There are two problems here. First, at least two OVA Board members are members of the OGC, and many of us feel that they were ethically, if not legally, required to recuse themselves from all discussion of the OGC question, starting at least at the recent Board election, since the OGC question arose well before that. A worse problem, in my view, is that three Board members have refused to declare whether or not they are members of the OGC, thus denying OVA members an essential piece of information for evaluating whether or not these Board members are performing their fiduciary duties ethically. This issue is complex, and is covered in detail in [2].

What can the OVA Board do to make this right?

1. Notify the OGC Board that, until the newly reconstituted Long Range Planning Committee (LRPC) completes a comprehensive review of OVA spending needs for the next several years, no decisions will be made that commit OVA to major funding of OGC. This will necessarily mean that no 2019 funding will be provided, other than reasonable fee-for-service items such as renting OGC space while East Rec construction is going on. (Delaying funding until after 2019 was my first recommendation in [3].)

2. Create an OGC Exploratory Ad Hoc Committee , comprised of OVA members who have no connection to OGC, to evaluate the need, means and consequences of financial cooperation with OGC. This committee should be responsible for getting independent, unbiased professional review of legal issues and of complex technical issues, such as the degree to which OVA should or should not accept partial responsibility for storm drain maintenance. It should also work with OGC to provide a financial summary for all of us to review, with an independent audit to assure accuracy. The content of the financial summary should exclude information which OGC is legally or contracturally bound to protect, but it absolutely must provide enough information for OVA members to judge the validity of OGC claims of need. (Taken directly from [3].)

3. Set a timeline for the OGC Exploratory Committee final report, such that their findings can be reviewed by the OVA membership as well as the Board, in time to guide the 2020 budget process. The charter of this committee should be open enough that their recommendation might be “no support” as well as positive levels of financial cooperation between OVA and OGC. (Taken directly from [3].)

4. Make sure that the mission of the LRPC includes arriving at a funding and dues profile that includes most probably high and low values for each of the next 4 or more years, for capital expenditures and dues increases necessary to make them. This profile should serve as context for any decision to assess OVA members, in order to provide funding assistance to OGC.

5. Create a Golf Course Contingency Fund, and fund it with at least $5/month/OVA member starting in 2019, to provide funds to be able to react to whatever happen to the OGC property that has an impact on the large community. This fund need not require as much study as providing financial aid to OGC, because saving money that remains under OVA control is a much easier decision to make than giving the same money away. If, after proper deliberation, we decide that some sort of transfer of funds to OGC is best for OVA, then some or all of the funds in the GCCF could be transferred to OGC. If we decide not to fund OGC, or not to fund them as much as they need to stay out of financial trouble (it could be that they will need far more than $5/month/OVA member within a few years), then the GCCF could be used for legal action to prevent the worst possible consequences (e.g. fairways turn into condos), or even to purchase all of the OGC property. The point is that having money in the bank would open up many options not available if we don’t have money in the bank. If we end up having to bail OGC out in 2020 or 2021, then having started saving for it in 2019 will be all to the good. And if a miracle happens (maybe a wealthy donor sets up an OGC endowment?), then the GCCF funds could be rolled over into the Capital Improvement Fund, or returned to OVA members as a dues decrease.

6. Decide on a legally and ethically defensible standard for what constitutes a conflict of interest with respect to the OGC question, vote it as a policy of the OVA, and ensure that each Board member publicly declares any conflict as defined by the standard, and recuses himself if necessary. (This was recommended in [2].)

What can OVA members do to make this right? Write, call or Email your OVA Board members (Email addresses may be found at https://oakmontvillage.com/oakmont-residents/govt/board-of-directors/), asking them to correct whatever you see as wrong. Speak out at Open Forum, asking questions that require Board members to go on the record with their answers, and let them, and anyone listening, know what you think.

The next article in this series will cover What’s wrong with Oakmont News coverage of the OGC question?

REFERENCES

[1] Berger Upgrade Impact on Oakmont Dues, Bruce Bon, 10 March 2018, https://nextdoor.com/news_feed/?post=78056025

[2] Conflict of Interest and the OVA-OGC Question, Bruce Bon, 5 July 2018, https://oakmontobserver.com/conflict-of-interest-and-the-ova-ogc-question/

[3] An Open Letter to Steve Spanier – You Are Failing on the OGC Issue, Bruce Bon, 5 June 2018, https://oakmontobserver.com/an-open-letter-to-steve-spanier-you-are-failing-on-the-ogc-issue/